New rules to control foreign investment in China's property market have been agreed, following concern that surging foreign speculation in the market is forcing up house prices.

Shanghai-based China Business News yesterday reported that six government bodies including the Ministry of Construction and Ministry of Commerce have signed an agreement on a rule to regulate overseas capital in the property market.

Foreign firms or individuals will have to use their real names when buying residential houses. And foreigners will not be allowed to buy residential housing that is not for their "own use or own habitation," the rule said.

"The measure provides a premise for the government to impose a property tax, which has been very popular in most developed countries," said Xu Dianqing, professor with the China Centre for Economic Research of Peking University.

"A property tax would demand a register of names, and it would be the best way to restrain speculation on the property market," he said.

The rule also requires foreign businesses or individuals buying Chinese property not for their own use to set up a China-registered company to handle the purchase.

The measures are believed to make it easier for the government to monitor the flow of overseas capital in the property market.

"Though there has always been a claim that foreign capital pushes up prices, both the government and research department in fact lack detailed data on this," said Yu Zhiyong, an analyst with Shenzhen-based China Merchants Securities. "The name register will give them a clearer picture."

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